FCC Bigwig Rethinks Fox

The head of the FCC branch that recommended Rupert Murdoch be allowed to buy six U.S. TV stations in 1985 now says he would not have permitted the transaction had he known the deal was being financed with 99% equity from Australian-based News Corp.

The sworn affidavit from Roy Stewart, who was chief of the FCC Mass Media Bureau’s video services division in 1985, is the latest twist in the FCC’s lengthy probe into Fox’s alleged illegal purchase of six Metromedia stations. The FCC is exploring whether Fox concealed information when it bought the properties to avoid running afoul of rules that bar foreigners from owning more than 25% of U.S. TV stations.

Fox now freely admits that 99% of the equity used to finance the station deals came from News Corp. However, Fox says Murdoch became an American citizen to get the deal done, and claims the issue is moot since Murdoch controls 76% of News Corp.’s voting stock.

Stewart stated that “at no time was I aware that News Corp. would own 99% of the licensee’s equity or any percentage above 25%. Had I been aware of that fact, I would have requested further information.”

Fox lobbyist Preston Padden dismissed Stewart’s claim. He said that “every other (FCC) staff member who has actually looked at the 1985 applications has revised their testimony” and now supports Fox’s contention that Murdoch acted properly.

Meanwhile, the FCC last week sought more information from SF Broadcasting on its possible link to Fox. SF is the Fox/Savoy Pictures-backed venture that intends to buy broadcast stations in the U.S.

Among other things, the FCC asked SF to supply the employment agreement of SF president Thomas Herwitz, the former general manager of Fox-owned WTTG Washington.

Sources said the FCC will also review whether NBC – which recently withdrew a complaint alleging Fox was illegally foreign-owned – was illegally compensated for the decision to drop its charge. NBC filed comments to the FCC Feb. 24 stating that “neither NBC nor its principals has received nor will receive any money or other consideration” in exchange for dropping its Fox complaint.